Sustainable Investing
Central to my investment belief is the view that sustainable companies will be able to generate positive free cash flow from operations over the longer term. Good governance practices provide the framework for this through the provision of appropriate strategic direction and policy setting. In addition, it is the effective allocation of free cash flow over time that drives long-term value creation for shareholders. To be successful, capital allocation requires astute management and oversight by Boards.
We welcome more recent enhancements to transparency and reporting on Environmental and Social considerations. There is substantial evidence that considering ESG factors in research processes enhance the prospects of achieving attractive risk-adjusted performance over the long term.
— William Priest, Executive Chairman and co-CIO
Epoch has a long tradition of investing with the purpose of providing solutions for our clients. In recent years we noted that many were beginning to explore incorporating ESG considerations into their investment policies. Hence, to further help our clients, Epoch has allocated resources to improve the formal incorporation of E, S & G considerations into our investing processes. In addition, signing the PRI is clear evidence of Epoch’s commitment to responsible investing.
— Philipp Hensler, Chief Executive Officer
Sustainable Investing Report 2019
The inaugural edition of Epoch’s annual Sustainable Investing Report. This report highlights several of the activities Epoch undertook in 2019 and point to some of the priorities we have established for 2020.
Dedicated ESG team
Ravi Varghese, Head of Sustainable Investing
Bio
Epoch’s ESG Policy
Epoch made a strategic commitment to ESG with the adoption of its first formal Policy in 2015. Following extensive research, Epoch is now pleased to formally launch a revised and updated ESG Policy. As noted in our Annual Report, while our focus historically has been on understanding governance frameworks to guide the operation of a business, throughout 2019 we also evaluated other issues within the umbrella of ESG considerations. In particular, Epoch considers climate change an increasingly important ESG factor and has adopted the CDP Global Investor Statement on Climate Change at the core of the revised policy. Our objective is to review and monitor the carbon intensity of our portfolios, focus on the major contributors, and engage with those companies to better understand their business strategy and what actions are being taken to address climate related risks. We have also made a number of other changes to our policy and we plan to develop other considerations to help broaden our understanding of both potential risks and opportunities for the companies we invest in.
Participation in Strategic Initiatives
Epoch is a signatory of the UN Principles for Responsible Investing. We are evaluating a number of initiatives including partnerships with academia, Non-Governmental Organizations (NGOs) and other associations relevant to the enhancement of our ESG processes and clients’ objectives.
We are pleased to announce that Epoch has recorded significant improvement across all categories from the Principles for Responsible Investment (PRI). Epoch was awarded an A rating for its strategy and governance on sustainable investment.
Epoch became a Signatory to the PRI in 2018, and remains committed to further integrating ESG considerations into its investing processes and expects to see continued improvements in PRI ratings.
Phillip Hensler, Epoch’s CEO commented:
“We are delighted with the recognition we have achieved from the PRI as we have progressed the integration of ESG considerations throughout our investing processes.”
Principles for Responsible Investment (UN PRI)
Industry Associations
Epoch continues to examine the merits of joining various associations to benefit our investment processes and ESG program. These organizations provide valuable education and opportunities to collaborate. To date, Epoch has become a member of CDP and Ceres.
CDP
“CDP (formerly the Carbon Disclosure Project) is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Over the past 15 years CDP has created a system that has resulted in unparalleled engagement on environmental issues worldwide.”
Link to CDP website
Ceres
“Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and inequitable workplaces.”
Link to Ceres website
Resources
- Epoch: The Role of Responsible Investing in Active Equity Management
- We’ve written a number of white papers and insights and also hosted a podcast which touch upon ESG issues over the years. Link to ESG Resources